Since financial issues can cause considerable stress in a marriage, it’s no surprise that some married couples who have filed for bankruptcy decide to get divorced while they are still in the process. The two spouses cannot share a family law or bankruptcy attorney because of conflict of interest considerations. One will need to consult a lawyer such as Joseph I Wittman Attorney at Law if he or she is unsure whether to terminate the bankruptcy proceedings or needs legal representation.
Types of Filings
A Chapter 7 filing dissolves some of the couple’s assets to pay creditors, after which the debt slate is wiped clean except for specific obligations, such as student loan debt. With Chapter 13, the couple has set up a repayment arrangement lasting three to five years. They are paying off most or all of the obligations with one affordable monthly payment distributed by a program administrator.
Decisions About Chapter 7
Since Chapter 7 is a much faster process, it is typically best to wait for the divorce until this program has wrapped up. Terminating the filing midway through and having to start over again will cost more in legal fees and can become very complicated. The debtor must file a petition with the court, requesting a judge to dismiss the filing, and a judge may be unwilling to do this. In addition, as soon as the filing is dismissed, creditors can begin collections activities again.
Decisions About Chapter 13
With Chapter 13 taking several years to wrap up, a married couple who no longer want to be together probably won’t want to wait unless they are near the end of the repayment program. A lawyer like Joseph I Wittman Attorney at Law can represent one of the spouses in petitioning the court to dismiss the current arrangement and for setting up a new one for the individual client.
Another option would be to complete the payments as scheduled even after a divorce, which might be feasible if the couple is on relatively good terms. However, this decision does lock them in financially for the foreseeable future. Click here to find contact information for consulting a bankruptcy lawyer.